Since education makes a person more likely to leave your region, how do you justify your investment in human capital?

Wednesday, June 13, 2007

Brain Drain Reflux

Pennsylvania is number one in attracting out-of-state first year college students. The state is also first in net inflow of freshmen. According to a recent article in the Wall Street Journal, PA isn't benefiting from being a national undergraduate magnet. The author fails to deliver a coherent argument, touting the benefits of investing in higher education while pointing out Pennsylvania's lousy return:

The Pennsylvania Higher Education Assistance Agency has provided $45 million in scholarships and internship wages for those studying in the science and technology fields. The state also has set aside 19% of the $2.74 billion it received in tobacco-settlement payments for bioscience research, some of which is being disbursed to state colleges.

A big part of Pennsylvania's plan to solve the brain drain problem is to invest MORE into higher education. I'm dumbfounded. I don't begrudge the money going to research universities, but I fail to see how these initiatives, even the more enterprise-centric Keystone Innovation Zones, will stem the tide of outmigration. What the WSJ article indicates is that investment in higher education doesn't result in job creation.

I don't see a strong connection between investing in higher education and carving out a bigger piece of the knowledge economy, but I do notice an opportunity in playing a large role in educating America:

A higher concentration of degree holders may help boost a state's economic growth, according to Enrico Moretti, who teaches economics at the University of California, Berkeley. His research shows that a one- percentage-point increase in a city's share of college graduates can equate to a 0.5- to 0.6-percentage-point increase in productivity, which he calls "remarkably robust."

But employees with advanced degrees in the most productive states aren't necessarily educated there, he says. While states that invest in higher education retain more graduates than those who don't, they also are "financing the human capital in Los Angeles, San Francisco and New York," says Mr. Moretti.

Pennsylvania is doing a great job of producing human capital for other regions. College graduates should chase the best job they can find. As a first step towards benefiting from this migration pattern, PA schools should help students relocate (enhancing the competitive advantage for attracting students). Second, get rid of the instate discount and decrease the taxpayer's burden, but make entrance into state institutions easier for residents (incentive for parents to move to Pennsylvania). Third, provide grants and scholarships for PA-centric research (put that brainpower to work while it is instate). Fourth, promote regional assets that speak to a more mature stage in a career track or life stage (encouraging brain circulation). Fifth, build a virtual PA alumni collaboratory (where those PA-centric research projects live on) and connect the knowledge capital around the world that shares a Pennsylvania education (invest in long distance heritage-based relationships).